March 13, 2000 Making the Virtual Real, and the Real Virtual: PC Forum 2000 By Esther Dyson and Kevin Werbach, Release 1.0.

Soliloquy creates user interfaces that use natural-language processing to facilitate e-commerce transactions. The company's first product, Pick-a-PC, helps people select a computer that suits their needs. By helping customers obtain products well suited for their needs (for example, the system would recommend lightweight and durable laptops to a user who identifies herself as a frequent traveler), the technology can improve the customer experience and increase the number of transactions.

The New York-based company is nearly three years old, though it is just now bringing its service to market. Soliloquy originally focused on speech recognition, and it built a top-flight technical team that includes eight PhDs and 20 Masters degrees among the company's 35 employees. However, founder and CEO Catherine Winchester eventually concluded that the market wasn't ready for speech as a primary interface for e-commerce. Though Soliloquy still plans to offer speech interfaces some day, it now concentrates on the conversational interface that was at the heart of its effort all along.

The key to making Soliloquy's technology viable in the marketplace, Winchester says, was recognizing the need to optimize it for particular product categories: "We're focusing on specific vertical markets because in order for natural language to work well you need to limit the knowledge domain." Target markets include computers, consumer electronics, and financial services, all of which involve complex, high-value goods.

Soliloquy plans to license its technology both to PC manufacturers and to intermediary sites. So far it has signed deals with HP, ZDNet and Acer, and it has an agreement with CNet to use that company's vast PC configuration database as content for its offering.

Winchester cites three major benefits of Soliloquy's offering: decreasing costs by reducing the need for customer-service representatives, increasing sales because customers are better informed and served, and mining the dialogues for information to improve business methods. "We are capturing every single conversation and logging it and data mining it," she says, hastening to add that user privacy is protected and every partner controls its own data. She emphasizes that this "dialogue mining" provides more useful information than traditional clickstream analysis, "because people are telling the Website in their own words what they are looking for."

CTO Mark Lucente, who joined Soliloquy from IBM Research, cites the speed with which the system can respond to customers' requests as a big plus over human salespeople. "It's an interaction similar to the way humans interact with humans," he says, adding that, "computers can do some things better than humans." In a recent usability survey, 83 percent of Pick a PC users actually said the experience felt more credible and intelligent than chatting with a live person.

Soliloquy distinguishes itself from others in the natural language space such as Neuromedia (a 1999 PC Forum company presenter) by emphasizing the turnkey nature of its system. Lucente observes that retailers and PC OEMs "don't want to build this themselves; they want to buy it." Rather than sell technology or toolkits, Soliloquy sells complete interfaces for specific product categories.

Soliloquy's technology is built around meaningful dialogue. "Conversation means a progressive refinement. It means you build on the context," states Lucente. When requests are very complex, the product can summon a human to continue the conversation, but Winchester believes Soliloquy can solve about 80 percent of consumer problems through its automated system.

Reprinted with permission from Release 1.0, which is published monthly except for a combined July/August issue by EDventure Holdings Inc., 104 Fifth Avenue, New York, NY 10011-6901; (212) 924-8800; fax (212) 924-0240; edventure.com. Editor-in-chief: Esther Dyson (edyson@edventure.com); publisher: Daphne Kis (daphne@edventure.com); editor: Kevin Werbach (kevin@edventure.com). Copyright 2000, EDventure Holdings Inc.  All rights reserved."